Australia and China began talks yesterday towards a free trade deal, boosting China's efforts to be accepted as a full market economy and Australia's bid for greater access to the world's most populous market.
"The China-Australia FTA [free trade agreement] is a significant development in our relations," said Wu Bangguo, China's parliamentary chief.
"It will help expand bilateral co-operation in trade, investment and services and provide even greater horizons for our economic partnership."
In contrast, China is locked in an increasingly bitter dispute with the United States and the European Union over its textile shipments.
Annual trade between Australia and China, its third-largest trading partner, has quadrupled in the past decade to A$28.9 billion ($30.8 billion).
A joint study says an agreement between the two will generate US$82 billion ($115.7 billion) in joint economic benefits over 10 years.
In a move similar to New Zealand, Australia has granted China "market economy" status, unlike the US and the European Union. New Zealand was the first country to engage in free trade talks with China and the third round of negotiations start in Wellington this week.
Australian Trade Minister Mark Vaile said the talks were based on an agreement that each side treated the other as an equal trading partner.
"That meant recognising China as a market economy," he said.
China has lobbied hard for its trading partners, especially the EU and the US, to grant it the market economy status in the hope it would cut the number of anti-dumping cases brought against it.
China entered the World Trade Organisation in 2001 as a non-market economy, giving other members the right to impose anti-dumping restrictions on China's goods.
"By recognising China's full market-economy status, Australia has rendered Chinese enterprises fair and equal treatment, which paves the way for closer co-operation between our enterprises," Wu said.
Vaile said an FTA, which may take years to finalise, would give Australian businesses an advantage in the booming Chinese market.
Australia already has free trade deals with New Zealand, Singapore, Thailand and the US and is negotiating with Asean. Wu said Australia and China were ideal trading partners due to Australia's abundant natural resources and China's resource-hungry industries and huge labour force.
But Vaile said Australia was not prepared to merely be a quarry for China. "We are not taking the view that we are just going to be a resource supplier."
- REUTERSBy Michael Perry